School Finance Basics

Kansas Legislative Research Department

SCHOOL

FINANCE

BASICS

1January 2013

•General fund •Supplemental fund

“Local Option Budget” (LOB)•Special education•Capital funds•Bond and interest funds


SCHOOL DISTRICT BUDGET’S MAJOR FUNDS

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TWO PRINCIPLESBEHIND THE GENERAL FUND FORMULA

Differences in students result in different education costs Addressed in the budget

calculation

Differences in property wealth among the school districts result in different abilities to pay for the same level of education Addressed in the

revenue calculation

Kansas Legislative Research Department 3

GENERAL FUND BUDGET

Based on Student Differences:

Premise: Differences in students result in different costs to educate i.e., Individual characteristics, the size of the school

district, the distance a student must travel to get to school

Derived from a formula that “weights” the student count based on these differences and multiplies the weighted student count (“Total Weighted FTE”) by a specified per-student amount


Example: Disabled Students

May have acute learning challenges that require acute care, smaller pupil-teacher ratios, one-on-one attention

Policy choice made several decades ago, through decisions at the federal and state legislative levels and by the U.S. Supreme Court


DIFFERING CHARACTERISTICS AMONG STUDENTS CAUSE DIFFERENCES IN COST

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Other Examples: Socioeconomically disadvantaged students Non-English-speaking students Gifted students Students who need alternative school settings Students who are at risk of not succeeding in school Vocational education students


DIFFERENT INDIVIDUAL CHARACTERISTICS AMONG STUDENTS CAUSE DIFFERENCES IN COST

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More Examples:Student Enrollment

Small district size Large district sizeVarying transportation distances


DIFFERENCES AMONG STUDENT ENROLLMENT CAUSE DIFFERENCES IN COST

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In Kansas

Special education students Addressed by a separate formula Significant issue in any state Policy sources: Federal and State legislative decisions, courts

At-risk students Addressed through weighting Proportion of Free Lunch-qualified students ranges from 6

percent to 86 percent Policy source: State Legislature


STUDENT DIFFERENCES

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In Kansas

Students in a small school district Addressed through weighting Student counts range from less than 100 to more than 46,800 Policy source: State Legislature

Students pursuing vocational education Addressed through weighting Importance is increasing and direction is evolving Policy source: State Legislature

Bilingual students Addressed through weighting The number of non-English speaking or bilingual students is

large and growing Policy source: State Legislature


STUDENT DIFFERENCES

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WHERE DO WE BEGIN?

Funding for education starts at the school district level.

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The BSAPP for the 2012-2013 school year is $3,838

This is Jill. She attends a Kansas school, full-time. She is 1.0 FTE.

This is Jack. He attends the same school, full-time. He is also 1.0 FTE.


GENERAL STATE AID (B SAPP X ADJUSTED ENROLLMENT) – LOCAL EFFORT

= GENERAL STATE AID

The district automatically gets $3,838 for Jill and $3,838 for Jack.

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Added to reflect additional costs associated with serving certain populations, transportation, operating small and large school districts, and adding and operating new facilities.

Known as Weightings .


ENROLLMENT ADJUSTMENTS

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Low EnrollmentTransportationBilingual School FacilitiesAncillary School

Facilities

High EnrollmentVocational EducationAt-Risk

High DensityLow DensityNon-proficient

Declining EnrollmentCost of Living


WEIGHTINGS

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Applies to school districts with an unweighted FTE of less than 1,622. For this distr ict* : FTE Enrol lment X 1 .014331 = Low Enrol lment Adjustment

Jill and Jack attend a school district with an enrollment of 95 FTE.

95.0 x 1.014331 = 96.4


LOW ENROLLMENT

*The exact weight changes based on actual enrollment

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Determined by multiplying the FTE enrollment in vocational education programs by 0.5 and by the amount of t ime in vocational instruction (e .g . ,

0 .5). Revenue must be s pent on vocat ional educat ion.

FTE enrollment in Voc . Ed x 0 .5 x 0 .5 = Vocat ional Education Adjustment

Jack spends one-half of each school day in a vocational education class, so .5 FTE x .5 vocational education weighting = .25 is the vocational weight for Jack


VOCATIONAL EDUCATION WEIGHTING

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Determined by multiplying the FTE enrol lment in bi l ingual education programs by 0.395 and by the amount of t ime in bi l ingual instruction (e .g . , 0 .6) . Revenue must be spent on bi l ingual education or at-risk education.

FTE Enrolled in Bilingual Program x 0.395 x 0.6 = Bil ingual Education Weighting

Jill is enrolled in a bilingual program taught by a teacher certified in English as a Second Language six-tenths of a school day. The weighting would be figured this way:

.6 x .395 = .24 is the bilingual weight for Jill


BILINGUAL EDUCATION WEIGHTING

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Applies to students who qualify for free meals under the National School Lunch Program.

No. of pupils qualifying for free lunch x 0.456 = At-Risk Pupil Weighting

Ten students in Jack and Jill’s school district qualify for free lunch. The at-risk weighting is determined as shown below:

10.0 x 0.456 = 4.56 is the at-risk weight for the school district


AT-RISK PUPIL WEIGHTING

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Add all these weights together for a Total Weighted FTE:

95.00 Full Time students 96.40 Low enrollment weight .25 Vocational education weight .24 Bilingual weight + 4.56 At-risk weight

196.45 total weighted students in Jack and Jill’s school district


http://www.ksde.org/Default.aspx?tabid=1830

Information on weightings for all school districts can be found at the address below on the Kansas Department of Education website.


TWO PRINCIPLESBEHIND THE GENERAL FUND FORMULA

Differences in students result in different education costs Addressed in the budget

calculation


revenue calculation


Total Weighted FTE X Base State Aid Per Pupil (“BSAPP”)

= General Fund Budget*


PART ONE: THE GENERAL FUND BUDGET* CALCULATION

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*In state law, this is referred to as “state financial aid”

Weighting the Student Count (FTE):Weighting the Student Count (FTE)

Fictitious District

FTE Enrollment

Low Enr. Weight

At-Risk Weights

Bilingual Weight*

Vocational Ed. Wt.**

Total Weighted

FTE

A 1,000 246.4 0 0 25 =(100 x 0.5 x 0.5)

1,271.4

B 1,000 246.4 114(250 x .456)

100(416 x 0.6 x 0.4)

50(200 x 0.5 x 0.5)

1,510.4

C 25,000 0 48(105 x .456)

0 125(500 x 0.5 x 0.5)

25,173

D 25,000 0 2,736(6,000 x .456)

0 250(1000 x 0.5 x

0.5)

27,986

*Assumes all bilingual students are in bilingual instruction for 0.6 of each school day**Assumes all vocational education students are in vocational instruction for 0.5 of each school day

PART ONE: THE GENERAL FUND BUDGET CALCULATION

Kansas Legislative Research Department22

Finding Total General Fund Budget(Multiplying Weighted State Aid by BSAPP)


Fictitious District

FTE Enrollment

(Total Weighted

FTE

multiplied by BSAPP) equals Total General

Fund Budget

A 1,000 (1,271.4 X $3,838) = $ 4,879,633

B 1,000 (1,510.4 X $3,838) = $ 5,796,915

C 25,000 (25,173 X $3,838) = $ 96,613,974

D 25,000 (27,986 X $3,838) = $107,410,268

PART ONE: THE GENERAL FUND BUDGET CALCULATION

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•General fund •Supplemental fund

(“Local Option Budget,” or LOB)•Special education•Capital funds•Bond and interest funds


REMEMBER WHERE WE ARE:SCHOOL DISTRICT BUDGET’S

MAJOR FUNDS

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REMEMBER THE TWO PRINCIPLES

BEHIND THE GENERAL FUND FORMULADifferences in students

result in different education costs Addressed in the budget

calculation


revenue calculation


You’re going here

Current formula is based on a policy (legislative) decision to address the property wealth differences between districts

Policy Questions: Should the property wealth in a school district determine how much is spent on each student in that school district? Should a zip code determine education taxes?

String of lawsuits nationwide, beginning in the 1970s, led to state equalization aid formulas across the nation .


PART TWO: THE GENERAL FUND REVENUE CALCULATION

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The Kansas experience: Two equity-based lawsuits (1973 and 1992) 1992: School District Finance and Quality Performance Act

established the basic equalization aid formula It has been amended and refined since then

see http://skyways.lib.ks.us/ksleg/KLRD/Education.htm for link to summary


THE GENERAL FUND REVENUE CALCULATION

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http://skyways.lib.ks.us/ksleg/KLRD/Education.htm

Total General Fund Budget - Local Effort__________

= General State Aid



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What is the Local Effort? Some major items include: The statewide education property tax levy

20 mills* multiplied by assessed valuation, with a $20,000 residential exemption

Other local property tax amounts e.g., delinquent, mineral production

“Federal Impact Aid” (70 percent) Unencumbered cash balance

*20 mills since 1998



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ABOUT THAT 20 MILL TAX… IS IT STATE OR LOCAL?

Article 64. - SCHOOL DISTRICT FINANCE AND QUALITY PERFORMANCE

Next

72-6431. Ad valorem tax levy required; purposes; rate; disposition of proceeds. (a) The board of each district shall levy an ad valorem tax upon the taxable tangible property of the district in the school years specified in subsection (b) for the purpose of:(1) Financing that portion of the district's general fund budget which is not financed from any other source provided by law;(2) paying a portion of the costs of operating and maintaining public schools in partial fulfillment of the constitutional obligation of the legislature to finance the educational interests of the state; and(3) with respect to any redevelopment district established prior to July 1, 1997, pursuant to K.S.A. 12-1771, and amendments thereto, paying a portion of the principal and interest on bonds issued by cities under authority of K.S.A. 12-1774, and amendments thereto, for the financing of redevelopment projects upon property located within the district.(b) The tax required under subsection (a) shall be levied at a rate of 20 mills in the school year 2011-2012 and school year 2012-2013.(c) The proceeds from the tax levied by a district under authority of this section, except the proceeds of such tax levied for the purpose of paying a portion of the principal and interest on bonds issued by cities under authority of K.S.A. 12-1774, and amendments thereto, for the financing of redevelopment projects upon property located within the district, shall be deposited in the general fund of the district….


http://kslegislature.org/li_2012/b2011_12/statute/072_000_0000_chapter/072_064_0000_article/






http://kslegislature.org/li_2012/b2011_12/statute/072_000_0000_chapter/072_064_0000_article/072_064_0032_section/072_064_0032_k/

How does Local Effort (mostly property wealth) impact General Fund State Aid?


Fictitious District

FTE Enrollment

Total Weighted FTE

General Fund Budget

Assessed Valuation Per

Pupil

Local Effort

General State Aid

A(1) 1,000 1,271.4 $ 4,879,633 $ 20,000 $1.8M $3.1M

A(2) 1,000 1,271.4 $ 4,879,633 $500,000 $3.1M $1.8M

B(1) 1,000 1,510.4 $ 5,796,915 $ 20,000 $2.0M $3.8M

B(2) 1,000 1,510.4 $ 5,796,915 $500,000 $3.8M $2.0M

PART TWO: THE GENERAL FUND REVENUE CALCULATION

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REAL KANSAS EXAMPLES( 2 0 1 1 - 2 0 1 2 S C H O O L Y E A R ; E XC LU D E S S P E C I A L E D U C AT I O N )

Actual District

FTE Enrollment

Total Weighted

FTE

General Fund Budget

Assessed Valuation Per Pupil

Local Effort State Aid

USD 499 Galena

792.2 1,333.4 $ 4,821,523 $ 18,111 $217,227 $4,604,296

USD 244 Burlington

824.2 1,303.3 $ 4,926,566 $421,790 $6,901,056 ($1,974,490)

USD 500 Kansas City

18,874.4 31,152.8 $117,757,451 $ 35,593 $12,262,185 $105,495,266

USD 229Blue Valley

20,898.2 29,239.1 $110,523,668 $108,226 $44,657,367 $65,866,301

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ONLY THE BEGINNING...

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School Finance Basics

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